The Top Down; The Bottom Up; The Technicals: EU Consumer Sector Specialist Commentary Retail • Luxury • Staples • Leisure • Airlines

Research evidence excerpt

The Top Down; The Bottom Up; The Technicals: EU Consumer Sector Specialist Commentary Retail • Luxury • Staples • Leisure • Airlines

ng despite Biedronka being heavily deflationary, 3) operating leverage is building, with better

than expected earnings flow through and 4) mgmt reiterated the message that Biedronka shall ease pricing in 2H. Margins are

holding robust despite running the business in heavy deflation mode of 3%, with operating leverage kicking in, whilst putting

pressure on the competition. With Biedronka proving its superior competitive position in Poland and the lack of alternatives to

own in the space (especially with growrng concerns in the UK and in the US), JMT shares look well positioned into H2. See all

details here

Staples

As I flagged in a recent email (here), while there is still plenty of volatility in the space, and a debate on whether or not the sector

can work if markets are moving towards higher risk, I do think we are seeing enough signs of a trough to the bad news: Q1 sales

updates saw more beats than misses and, while there are still concerns on volume recovery and margins into H2, some recent

updates from mgmt teams were more reassuring/confident rather than incrementally cautious. The team’s previews thus far are

also more positive than negative - and worth noting even the bearish ones have not triggered major negative share reactions. My

favorite names into H2?

Danone (JPM OW).On Track for H2 Step Up. Celine’s preview last week made me even more bullish on the name: while

market expectations had been lowered in prior quarters, she did not change her LFL into Q2, which could be a positive signal

growth momentum is improving. Shares de-rated in H1 (now trading at ~17x down from ~20x peaks) given concerns on a)